Following the influx of a significant amount of equipment into the Russian market in 2023, it is now imperative to streamline and eliminate non-core players. Meanwhile, operators are constrained by the new economic realities and have begun to significantly reduce expenditures, with many unable to afford high-value equipment. These trends have been observed by our industry experts.
How should we evaluate the current construction machinery market? What is your perspective on the legislative changes that occurred this year? Mikhail Karginsev, General Manager of MiroMax-Spetstekhnika: The current special equipment market is facing a complex and challenging situation. The elevated RMB exchange rate and difficulties in payments to China have introduced additional obstacles to equipment supply. The increase in the benchmark interest rate has made leasing high-priced equipment less feasible, significantly impacting demand. Cost-cutting measures are evident across all market sectors. Concerning the recent rise in recovery fees, we view this as a matter of significant concern. Within our product range, only the Lonking CDM312 mini loader is affected by this change; however, we have proactively prepared an inventory of these machines to minimize any impact on our customers.
Yevmof Pavel and Tumanov Alexey, founders of TEKHBAZA: As of the end of 2024, the market situation remains complex. On one hand, a buyer's market has emerged, characterized by an abundant supply of special equipment from various brands. Suppliers are offering highly competitive prices and conditions, with equipment available from established and emerging Chinese brands, as well as manufacturers in Turkey and India. Additionally, sanctioned brands have entered the market through parallel imports. On the other hand, both buyers and suppliers face a range of external and internal challenges, including a slowdown in national economic growth, accelerating inflation, rising credit/leasing costs, difficulties in overseas payments, and increased fees for the disposal of used equipment. These factors have exacerbated price increases for equipment and special equipment, further compounded by the depreciation of the national currency. Collectively, these factors have hindered market growth in terms of purchases and sales.
How did your company fare financially in 2024? Mikhail Karginsev, General Manager of MiroMax-Spetstekhnika: In 2024, our financial performance remained largely consistent with the previous year. In the small loader segment, we met our planned shipment volumes, maintaining parity with last year. However, we achieved significant growth in certain areas. For instance, sales of excavator loaders nearly tripled, increasing from approximately 60 units in 2023 to around 200 units in 2024. This segment has become a key focus area for us, yielding excellent results. Regarding spare parts, sales volumes remained stable, and we continue to provide reliable service and spare parts support for all types of equipment.
Yevmof Pavel and Tumanov Alexey, founders of TEKHBAZA: This year, TEKHBAZA set ambitious sales targets. Despite numerous challenges, we achieved these targets, albeit at the lower end of the target range. Nevertheless, this performance surpasses the market boom observed in 2023, representing a commendable achievement under current conditions. We also made significant progress in developing our service and after-sales business, ensuring sufficient spare parts inventory. We opened two new dealer centers in southern and northwestern Moscow, as well as new dealerships in Voronezh and Kazan. These initiatives have enhanced customer access to XGMA equipment and improved our customer service. In terms of product lines, thanks to the efforts of TEKHBAZA and XGMA factory service engineers, we made substantial improvements to excavator loaders and launched new models of small loaders and compact wheel excavators.
According to your predictions, what should market participants expect in 2025? Mikhail Karginsev, General Manager of MiroMax-Spetstekhnika: In 2025, competition in the market is expected to intensify, particularly in the excavator and loader segments. However, we see significant growth potential in the excavator loader sector. Our partner, the Chinese manufacturer Lonking, has introduced advanced solutions inspired by European standards, enhancing the competitiveness of their equipment. In the small loader segment, we anticipate substantial growth due to new distribution strategies. Securing exclusive sales rights in Russia would further strengthen our market position and boost sales. Thanks to our efforts, the Russian small loader market has expanded from 1,500 units annually to 5,000 units. We also expect Lonking to launch next-generation wheel-type mini loaders in spring 2025, which we believe will secure a strong market presence.
Pavel Mokov and Alexei Tumanov, founders of TEKHBAZA: We anticipate that 2025 will present greater challenges compared to 2024, with a projected decline in the total sales of new special equipment across all brands. However, we remain optimistic about the future, recognizing that opportunities often arise from difficulties. Our company is committed to increasing sales even in a contracting market. We expect the market to undergo a "clean-up" process, where non-core players who entered during the demand surge of 2022-2023-such as dealers of Chinese brands involved in parallel or gray imports-will likely exit. Over-indebted dealers may also need to reassess their strategies. Other market participants will need to enhance customer service, offer personalized financing options, and improve operational efficiency. These are precisely the areas where our company is actively focusing its efforts. We will continue to collaborate with the XGMA factory to enhance equipment quality and expand our product line. Additionally, we plan to introduce more electrically-driven equipment, such as compact loaders and road rollers, in response to rising fuel prices and the growing importance of reducing operating costs. Furthermore, we intend to expand our spare parts inventory. We anticipate growth in the sales of spare parts and after-sales services, a trend already evident in the increased workload at our service centers. To support this, we are actively investing in expanding our maintenance facilities.